Q1.

MB0053 International Business Management Write a note on Globalization.

Globalization is a process where businesses are dealt in markets around the world, apart from the local and national markets. According to business terminologies, globalization is defined as the worldwide trend of businesses expanding beyond their domestic boundaries. It is ad antageous for the economy of countries because it promotes prosperity in the countries that embrace globalization. Benefits of globalization !hile globalization creates employment opportunities in the host countries, it also exploits labour at a ery low cost compared to the home country. 1. Promotes foreign trade and liberalization of economies. 2. Increases the living standards of people in several developing countries through capital investments in developing countries by developed countries. 3. Benefits customers as companies outsource to low wage countries. utsourcing helps the companies to be competitive by !eeping the cost low" with increased productivity. #. Promotes better education and $obs. %. &eads to free flow of information and wide acceptance of foreign products" ideas" ethics" best practices" and culture. 6. Provides better 'uality of products" customer services" and standardized delivery models across countries. (. )ives better access to finance for corporate and sovereign borrowers. *. Increases business travel" which in turn leads to a flourishing travel and hospitality industry across the world. +. Increases sales as the availability of cutting edge technologies and production techni'ues decrease the cost of production. 10. Provides several platforms for international dispute resolutions in business" which facilitates international trade. Some of the ill-effects of globalization are as follows, 1. &eads to e-ploitation of labour in several cases. 2. .auses unemployment in the developed countries due to outsourcing. 3. /arms the local businesses of a country due to dumping of cheaper foreign goods. #. &eads to adverse health issues due to rapid e-pansion of fast food chains and increased consumption of $un! food. %. .auses destruction of ethnicity and culture of several regions worldwide in favour of more accepted western culture 6. Influences political decisions in foreign countries. 0he 12.s increasingly use their economical powers to influence political decisions. (. .auses ecological damage as the companies set up polluting production plants in countries with limited or no regulations on pollution.

Q2.

Why do nations trade? Discuss the relevance of Porters diamond model in todays business context.

"ountries world o er are endowed with different natural, human, and capital resources. #ach country aries from the other in combining these resources $land, labour and capital%. In a globalised set&up, e ery country cannot be as efficient as the best in producing the goods and ser ices that their residents demand. "ountries ha e to trade off their decisions to produce any good or ser ice based on opportunity cost. 'pportunity cost model helps us understand the choice of producing one good or another. (he production of the country depends on whether it is more efficient to produce the goods and ser ices with lower opportunity cost with increased and specialized production, or to trade those goods, with goods of higher opportunity cost. If a country can produce more of any goods or ser ices with the same resources used by any other country, it is said to ha e an absolute cost ad antage in the production of those goods or ser ices. )ations e en if they ha e an absolute cost ad antage in the production of goods that are to be traded *is a is its counterpart, would like to specialize in higher opportunity cost products. (he production size and scale may be limited by other constraints. Porters diamond model In 1++3" 1ichael Porter analyzed thesis outlined four broad attributes that shape the environment in which local firms compete and these attributes promote the creation of competitive advantage. 1. Factor endowments 4 Basic factors li!e natural resources" climate" and location and so on and advanced factors li!e communications infrastructure" research facilities. 2. Demand conditions 4 0he role of home demand in improving competitive advantage is emphasized since firms are most sensitive about the needs of their closest customers.

3. Relating and supporting industries 4 0he presence of suppliers or related industries is advantageous since the benefits of investment in
advanced factors of production spill over to these supporting industries. 5uccessful industries within a country tend to be grouped into clusters of related industries. 4. Firm strategy, structure and rivalry 4 6omestic rivalry creates pressure to innovate" improve 'uality" and reduce costs which in turn helps create world7class competitors. +e said that these four attributes constituted the diamond and he argued that firms are most likely to succeed in industries where the diamond is most fa orable. +e also stated that the diamond is a mutually reinforcing system and the effect of one attribute depends on the state of others.

Q3.

Why do firms pay so much attention to economic factors while entering in particular mar et? !ustify your answer with practical examples

(he economic en ironment refers to the economic conditions under which a business operates and takes into account all factors that ha e affected it. It includes prime interest rates, legislation concerning employment of foreigners, return of profits, safety of country, political stability and so on. ational economic policies 2ational economic policies depend on a country8s socio7economic and cultural bac!ground. 1. 9ull employment. 2. : high economic growth rate. 3. : low rate of inflation. #. :bsence of deficit in the country8s balance of payments. !conomic structure International Business managers need to understand and assess international economic forces at wor!. ,ey ariables that need to be examined include Gross -omestic .roduct $G-.% per capita, regional distribution of G-., le els of in estment, consumer expenditure, labor costs, inflation and unemployment Economic structure /#conomic infrastructure is the sum of all the external facilities and ser ices that support the work of firms including communication, transportation, electricity supply, banking and financial ser ices.

"ndustry structure- ;ntry and e-it barriers. 1. 2umber of competing firms. 2. 1ar!et share among firms in that sector. 3. :verage size of competing units.
Market growth / It is measured in terms of local currency and ad0usted for inflation. 1ocal currency is used because con ersions into other currencies are affected by exchange rate fluctuations. Income levels- )et income is another important ariable and is without tax payments from indi idual gross incomes. Sector wise tren s / Growth acti ity in a country might ary significantly among certain industries. !"enness of the econom# / (he ratio of a countrys imports and exports to its Gross )ational .roduct $G).% indicates its ulnerability to fluctuations in international trade. International ebt / An outstanding loan that one country owes to another country or institutions within that country. 2oreign debt also includes due payments to international organizations.

Degree of urbanization 40here are ma$or differences in incomes and lifestyles between urban and rural areas in most countries such as, 1. shopping patterns 4 shopping fre'uency" average purchase value. 2. 2ature of goods bought. 3. ;-pectations in 'uality and technical sophistication.
#. ;ducation levels. %. ;ase of distribution.

Q#.

"ow has #ndia reacted towards regional integration? Discuss briefly the trade agreements signed by #ndia.

It is defined as the unification of countries into a larger whole. It also reflects a countrys willingness to share or unify into a larger whole. (he le el of integration of a country with other countries is determined by what it shares and how it shares. 3egional integration re4uires some compromise on the part of participating countries. "ndia and #rade $greements :fter learning about regional trading arrangements in the previous section" we shall now discuss the trading agreements conducted by India < considers =egional 0rading :rrangements >=0:?s@ as the building bloc!s towards the ob$ective of trade liberalization. 0herefore" India participates in a number of =0:s" which include 9ree 0rade :greements >90:s@" Preferential 0rade :greements >P0:s@ and so on. 0hese agreements ta!e place bilaterally or in a regional grouping. 2ow we discuss some of the ma$or agreements signed by India. $sia-Pacific #rade $greement %$P#$& 0he :sia7Pacific 0rade :greement >:P0:@" previously !nown as the Bang!o! :greement" was signed on 31st of Auly 1+(%" as an initiative of the Bnited 2ations ;conomic and 5ocial .ommission for :sia and the Pacific >;5.:P@. 'ay of 'engal "nitiative for (ulti-Sectoral #echnical and !conomic )ooperation %'"(S#!)& Bangladesh India 1yanmar 5ri &an!a and 0hailand 0echnical and ;conomic .ooperation >BI150;.@" a sub7regional economic cooperation grouping" was formed in Bang!o! in Aune 1++(. 1yanmar $oined the grouping later in 6ecember 1++(. Bhutan and 2epal too $oined in 9ebruary 233#. 9ive members of 5::=. >India" Bangladesh" Bhutan" 2epal and 5ri &an!a@ and two members of :5;:2 >0hailand" 1yanmar@ are members of this agreement. $ramework %greement on &om"rehensive Economic &o-o"eration between In ia an the %ssociation of South East %sian 'ations-(he A5#A)s political economic and strategic importance in the larger Asia&.acific 3egion and its capability to become a ma0or partner of India in trade and in estment made India to 0oin association with A5#A). In ia-ME(&!S)( *referential +ra e %greement ,*+%-- (he ob0ecti e of this agreement is to create an en ironment for negotiations in the first stage, by granting mutual tariff preferences, and in the second stage, to negotiate a 2(A between the two parties in conformity with the rules of the !('. *ther agreements+ 1. India and 5ingapore .omprehensive ;conomic .ooperation :greement >.;.:@. 2. India75ri &an!a 9ree 0rade :greement >I590:@. 3. India7.hile Preferential 0rade :greement >P0:@. #. India7:fghanistan Preferential 0rade :greement >P0:@. %. India7Bhutan 0rade :greement. C. India72epal 0rade 0reaty. (. 9ramewor! :greement for ;stablishing 9ree 0rade between India and 0hailand. *. 9ree 0rade :greement >90:@ between India and )ulf .ooperation .ouncil >)..@. +. India7 Aapan 0rade :greement. 13. Aoint 5tudy )roup between India and Dorea. 11. 0rade :greement between India and Bangladesh. 12. .omprehensive ;conomic .ooperation and Partnership :greement >.;.P:@ between India and 1auritius.

Q%.

Ehat is global sourcingF Ehat ma!es India so attractive for global sourcingF

Global sourcing is described as .the "ractice of sourcing cost effective an best goo s an services across geo"olitical boun aries in or er to cater to global markets/ . Global sourcing strategy is aimed at exploiting global efficienc#/ in all areas of manufacturing, trading and ser ices to enable offering clients and customer the best possible product or ser ice. ,lobal Sourcing )hallenges to "ndian "ndustries nce it becomes clear for any company that it is strategically in its interest to outsource" strategic planning and review of the advantages and disadvantages of each scenario under which it will outsource its business operations to other countryGregion should be done. Recruiting competent and s-illed wor-force India has the largest cost effective" professional talent pool of ;nglish spea!ing people in the world. 3ecruitment market for pro iding ser ices to clients is India is getting extremely competiti e and companies in India are compelled to open offices in second tier cities to expand their business operations by recruiting cost effecti e talent pool. #raining and development for manpower 9or creating a successful platform in services sector sourcing in global mar!ets" India has to have trained wor!force that is competent to respond to onetime floor challenges. )ontrolling attrition and managing retention In India8s I0 and I0es companiesH attrition levels are in the range of 1%I7C3I per year. 0he average attrition level for a voice7based call center in India is around #3I. 0here is huge challenge in wor!force management in India. 1ost young employees leave the BP s industry due to the monotonous wor!" and the physical toil of night7shift $obs Ensuring satisfactor# customer satisfaction0service levels "ompanies from de eloped countries that outsource their established processes to Indian ser ices pro ider expect that the 4uality and performance standards should be of highest le el. "ustomers must be satisfied from such off shoring of business operations with at least the same le el of or e en higher le el of performance standards. "nfrastructural and logistical challenges India has infrastructural bottlenec!s in all areas" i.e." roads" rail" air and maritime transport. ;ven virtual infrastructure li!e internet access" telecommunication" etc." which are vital for growth of services outsourcing is poor in India. Power and connectivity are the most important components for sustainable growth of services sector outsourcing from India.

QC.

Erite short notes on, a@ .ross cultural management b@ E0

a@ .ross cultural management7 In international management" where people are from different cultures" you have to develop and apply your !nowledge about cultures and not use a standard process for everyone. 0his is called cross cultural management. 0he factors to be considered in cross cultural management are, 1. .ross cultural management s!ills. 7 (he most important aspect to 4ualify as a manager for positions of international responsibility is communication skills. (he managers must adapt to other cultures and ha e the ability to lead its members. 2. /andling cultural diversity.7 "ultural di ersity in a work group offers opportunities and difficulties. #conomy is benefited when the work groups are managed successfully. (he organizations capability to draw, sa e, and inspire people from di erse cultures can gi e the organization spirited ad antages in structures of cost, creati ity, problem sol ing, and ad0usting to change. 3. 9actors controlling group creativity. 7 'n complicated problem sol ing 0obs, di erse groups do better than identical groups. -i erse groups re4uire time to sol e issues of working together. (he work experience helps to o ercome gender, racial, organizational and functional discriminations.

#. Ignoring diversity.7 It may be difficult to manage diversity. It is better to ignore" which is also an alternative. 0he management must, 1. Ignore cultural diversity within the employees. 2. 6own7
play the importance of cultural diversity. Denial to identify diversity happens when management, 1. 9ails to have sufficient awareness and s!ills to identify diversity. 2. Identifies diversity but does not have the s!ill to manage the diversity. 3. =ecognizes that the negative conse'uences of identifying diversity will cause greater issues than ignoring it. 5trategies to ignore di ersity may be possible when culture groups are gi en arious 0obs, and sharing re4uired resources are independent in the workplace. Groups and group members are e4ually incorporated and work together. In such cases, confusion occurs when the di erse alue systems held by different staff groups are not identified. b@ E0 7 Eorld 0rade rganization >E0 @. E0 was established on 1st Aanuary 1++%. 0he E0 is the successor to the )eneral :greement of 0ariffs and 0rade >):00@. India is one of the founders of E0 . E0 represents the latest attempts to create an organizational focal point for liberal trade management and to consolidate a global organizational structure to govern world affairs. E0 has attempted to create various organizational attentions for regulation of international trade. *b.ectives and functions 1. /elping trade flows by encouraging nations to adopt discriminatory trade policies. 2. Promoting employment" e-panding productions" trade and raising standard of living and income and utilizing the world8s resources. 3. ;nsuring that developing countries secure a better share of growth in world trade. #. Providing forum for trade negotiations. %. =esolving trade disputes.